Why Use a Trust Instead of a Will?

By
Willingham Law Firm, PC
|October 12, 2017

Why Use a Trust Instead of a Will?

Influence the Use of Your Property After You Die

By controlling the property, you are not manipulating or controlling your
heirs or their lives. Rather, this is about ensuring money isn’t
foolishly squandered, your family isn’t taken advantage of, and
ultimately, you are preserving their inheritance and your legacy, so it
can be advantageous to future generations. Regarding their estate plans
and what potentially might happen to property after they pass, many people
surprisingly seem content to simply let their children handle it when
the time comes.

Those who don’t demonstrate a desire to influence the use of their
estate, generally fall into 1 of 4 categories:

They have very little property about which to be concerned

They implicitly trust those to whom they are bequeathing their property

They don’t want to spend money to create a detailed plan

They haven’t thought about it enough

If you believe any of the above, consider this: this is not about ego,
your drive to hold on post-death, or the desire to control people with
the money you’ve made. This is about taking care of your loved ones,
preserving what you’ve worked so hard to build for them, and ensuring
your property and assets are utilized in the most beneficial way possible
for your family.

When Should You Create a Trust to Control the Fate of Your Property?

Swindlers, Strippers, and Bail, Oh My…

“I was a hip kid. When I saw Bambi, it was the midnight show.”
- George Carlin

The kid in question was 19 when his father passed. Besides the emotional
factors of how a 19-year-old grieves and processes such a tragic event,
this boy had no concept of how to run a house, manage the estate, and
ultimately make informed decisions about the property. After a year, he
was offered what he considered a fair amount of money for the house and
land from a so-called friend. Rather than consulting a real estate agent,
or talking to an estate planning attorney, he sold. A few months later,
his friend resold the property for twice the purchase price. Though this
was a hard lesson to learn, it wasn’t the end of the unfortunate
recurrences. As a 20-year-old, he was ecstatic about making this money,
regardless of whether or not he got ripped off on the sale of his family home.

After coming into money, he got involved with a sex worker--during which
time she was steadily evacuating his bank account. She later ran off,
and he consequently went to jail. His father’s remaining money was
used for bail. What this goes to show is, people in their late teens and
early 20’s may not make the best decisions regarding property and
assets, and it is necessary to safeguard their future.

A HEMS trust, also known as Health, Education, Maintenance, and Support,
is a way to ensure your property goes to the best possible use. It is
essentially a trust in which the power to distribute money from your estate
to your children is put in the hands of someone you believe is best equipped
to handle the job--giving you peace of mind, knowing your estate won’t
be squandered. By doing so, you will ensure your beneficiaries make smart
decisions versus poor.

The Warden Threw a Party

“The first prison I ever saw had inscribed on it CEASE TO DO EVIL:
LEARN TO DO WELL; but as the inscription was on the outside, the prisoners
could not read it.” - GEORGE BERNARD SHAW

A man went to jail for the attempted murder of his spouse, shooting a police
officer, and assault with a deadly weapon among other crimes. Ending up
in a Chicago prison, he was informed his mother and sister had passed
away. No estate planning had been done, and thus the assets and property
simply were passed on to him without limits or restrictions of any kind.
A few years later, he was released from prison. Now back out in society
with a settlement, the man spent the bulk of his inheritance on drugs
and alcohol. After 8 years of hard living and drinking, he passed away.
The little left of his mother and sister’s estate went to a Las
Vegas stripper, while his son and daughter got absolutely nothing.

Can you trust your beneficiaries to handle your property properly, in order
to maximize its value and worth for the betterment of the family? If you
have any questions or doubts whatsoever, a well-executed trust is necessary.
You must look closely at whom you intend to leave your assets: do they
save? Saving is the hallmark of fiscal responsibility; it is the trait
of someone who takes money seriously and understands its importance long
term. Someone can earn a substantial income, but if they blow through
it, this is a fairly good indicator of how they would manage your estate.

Conversely, someone with a low income or little savings may be able to
manage money well if given the chance. Therefore, you must evaluate if
they understand how to save. Saving is very much a learned behavior, as
it takes practice. Depending on the age of your beneficiaries, perhaps
they have not had enough time and life experience to hone their saving
practices. In addition, you may need to think about the person’s
capacity to handle large sums of money. Unfortunately, there have been
too many instances in which someone inherits a substantial amount, only
to be bankrupt 5 years later. If your proposed beneficiaries are not qualified
to deal with large sums, you can help the situation by offering them to
a qualified person. There is nothing wrong with setting up a trust which
gives a credible party the responsibility of distributing money slowly,
over a given period of time.

Finally, in the case of a special needs beneficiary, you need a trust.
Trusts for beneficiaries with special needs need to comply with certain
specific rules, since the beneficiaries may be receiving government benefits.
If money is left directly to individuals receiving government benefits,
the individuals may lose these benefits and/or upon the passing of the
special needs beneficiary, any remaining money could end up in the government’s
hands. You may establish a Supplemental or Special Needs Trust, which,
as its name suggests, supplements those government benefits rather than
supplanting them. Therefore, instead of leaving the money directly to
your loved one, it is left to the trust which will then disperse funds
as necessary; this does not leave assets vulnerable to eventual government control.

Contact Our Estate Planning Lawyers Today

The choice to set up a trust, as well as what kind, are important decisions
you will need to make. At The Willingham Law Firm, PC, our
estate planning attorneys are here to help you figure out the details of your life as
seamlessly as possible. Our legal team will help you weigh the pros and
cons, and come up with a plan which makes the most sense for you and your
beneficiary.

Schedule an initial consultation with a member of our firm by
calling (214) 499-9647.

The information on this website is for general information purposes only.
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